U.S. stocks fall after July payrolls increase less than forecast

U.S. stocks fell, after the Standard & Poor’s 500 Index rose to a record yesterday, as employers added fewer workers than anticipated in July even as the jobless rate dropped to 7.4%.

Chevron Corp. slipped 2.4% after posting its biggest second-quarter profit decline in four years. American International Group Inc. rallied 1.9% after saying it will pay its first dividend since 2008 and authorizing a share buyback of as much as $1 billion. LinkedIn Corp. surged 11% after increasing its full-year sales forecast. Dell Inc. advanced 5.4% as Michael Dell agreed to sweeten his proposal to buy the computer maker with a special dividend.

The S&P 500 (CME:SPU13) lost 0.1% to 1,704.60 at 12:27 p.m. in New York, paring an earlier drop of as much as 0.4%. The benchmark index rallied 1.3% yesterday. The Dow Jones Industrial Average declined 22.59 points, or 0.1%, to 15,605.43 today. Trading in S&P 500 stocks was 5.8% below the 30-day average during this time of day.

“This number isn’t an earth-shaker,” John Manley, who helps oversee $222.7 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “It is debatable if it was good or bad. It was OK. The number still indicates the Fed is going to be there for a while, that is not bad.”

The 162,000 increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain. Workers spent fewer hours on the job and hourly earnings fell for the first time since October.

The unemployment rate was forecast to drop to 7.5% from 7.6%, according to the Bloomberg survey median.

Consumer Spending

Consumer spending rose in line with forecasts in June as Americans’ incomes grew, while orders placed with factories increased, pointing to further stabilization in manufacturing that may help lift second-half growth, separate reports showed.

The S&P 500 climbed above the 1,700 level yesterday for the first time as central banks vowed to maintain stimulus efforts and data on global manufacturing beat forecasts. The benchmark gauge is trading at 15.4 times projected earnings, compared with an average of 13.9 over the last five years, according to data compiled by Bloomberg.

About 83% of stocks in the index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg. While that’s below a 19-month high of 93% reached in May, it’s up from its 2013 bottom of 12.8% in June.